While there we were meeting with a small MFI called “MiCredito” which operates in many towns giving loans to the poor who operate small businesses (such as fruit stands, pottery, small farms). These are people who usually would not be able to get a loan from the bank because of their lack of funds, and instead if they wanted to scale up their business and make more money would need to borrow money from loan sharks who charge upwards of 100% interest. MiCredito offers a fair interest rate as well as business skills training and guidance, savings accounts for their clients, and remittance services. Although I’ve read and heard a lot about micro-finance secondhand, this was my first time actually getting to see the process and speak with the high-ups directly. Veronica, the CFO, accompanied us to Leon and was extremely knowledgeable about the business.
On the crowded side streets of Leon we met Lesbia (a fairly common name here, believe it or not), a 22 year old woman who makes a living along with her mother and sisters selling fruit in the hot sun all day. She has a 3 year old and 1 ½ year old, and she and her husband Javier live on her $5 a day salary. She had requested a $500 loan over the course 9 months in order to buy more inventory for her stand. We accompanied a credit agent out to meet with her, see her stand, what she would use the money for, etc. She seemed nervous about talking with us but very nice, and we also went with them across town to see her house and her mother’s house (the credit agent was assessing the collateral she was guaranteeing the loan with—in this case a stereo and 2 TVs).
The state of the houses was pretty shocking, especially after seeing her and her smiling daughter looking so “normal” out on the street. The house (or rather, really a shack) was a crumbling adobe room, with a tin roof and no running water. The only pieces of furniture in the house were a small stove, a bed with no mattress, a hammock, a small table without chairs, and a TV and stereo. No bathroom, only one light, no real shelter from a hard rain or from the heat. The dirt floor, faint odor surrounding the house, and the decrepit state of everything except the electronics was a huge incongruity. The priorities of the very poor are sometimes appalling to me, and it is hard not to judge, although of course I try not to—I try to remember that if I had grown up in similar poverty and without an education as well, I would probably have the same outlook on things. But it’s really hard to imagine saving up to buy a $200 TV instead of putting a cement floor in the house, or buying the children a mattress to sleep on or toys to play with. But such is life—and as later explained by Veronica, in poor communities, having a TV and good sound systems are symbols of status and class in the community, not having them would mean being ostracized.
(a heard of cattle crossing the road in front of us on the way back to Managua)
At the end of the day, nothing is black and white, and everyone has a right to decide what to spend their money on, even the very poor. But hopefully with a micro-loan and an increased profit from the business, Lesbia will be able to keep her TV and start working on some other things like health care and a cement floor to protect her kids from disease, and also hopefully be able to send them to school when they’re old enough. No matter what other projects development focuses on, what is really needed is education for the children. This is how people can really start changing their lives and being empowered, and why micro-finance usually lends only to women-- while the men might spend their money on beer (or TVs)women tend to spend it on food and education.
All in all a somewhat frustrating, but very necessary and educational experience.
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